A sign is put on the roof of a South Korean taxi during a one-day strike that calls for ride-hailing service Tada to be banned, near the National Assembly in Seoul on Dec 20, 2018. (JUNG YEON-JE / AFP)

SEOUL - South Korea’s parliament on late Friday passed a controversial bill to limit ride-hailing service Tada, dealing a blow to a company that has been a smash hit since its launch in late 2018 but faced a backlash from taxi drivers angry over new mobility services.

South Korea’s National Assembly passed a revised passenger transport service act requiring rental vans with 11 to 15 seats for tour purposes to be used for at least six hours and that they be rented or returned at airports or seaports.

A current law bars rental car services from offering drivers, with the exception of vans with 11 to 15 seats - which are provided by Tada

A current law bars rental car services from offering drivers, with the exception of vans with 11 to 15 seats - which are provided by Tada.

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South Korea restricts ride-hailing to only licensed taxis and bans the use of private cars for the purpose. Tada has been exploiting a rule that allows the rental of chauffer-driven 11-seaters to operate its ride-hailing services, drawing fierce opposition from the taxi lobby and regulators.

The passage of the bill comes after Tada was cleared of transport law violations in court in mid-February. Prosecutors had sought one-year jail terms for executives of Tada and its parent firm Socar, arguing Tada was a de facto unlicenced taxi service.

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Following the passage of the bill, Lee Jae-woong, an entrepreneur and head of Tada’s parent company, said on Facebook he would halt Tada’s services and apologized to users, while asking who would dare to challenge and nurture innovative startups in the country.

The revised law is set to take effect 18 months after it is proclaimed.

Tada, launched in October 2018, has won 1.7 million users as it capitalized on growing demand and the funding muscle of its Japanese backer SoftBank Group Corp.